No Credit Check Loans
A guide to understanding your options.
The financial reality for many people these days is that they have low income, no savings, and weak or no credit. When an emergency happens—like a car repair or an unexpected medial situation—options can be hard to come by. In these cases, a personal loan may be very necessary. But which loan? And how do you apply for one without harming your credit even more?
The world of No Credit Check Loans
If you have weak credit (typically a FICO score of 620 or below), it can be difficult for you to get a loan from a bank or even from most online lenders. A no-credit-check loan from a private lender can then be very attractive.
But you need to take several things into account before making that final decision. Spend a little time doing research, and you’ll be much better off in the long run. Avoid predatory loans from payday and title lenders at all costs. If you don’t, you may go from “no credit” to “no paycheck” or, even worse, “no car.”
Why does checking credit matter?
It’s important for borrowers to understand credit checks because, generally, each time a lender or financial institution checks your credit, your score is actually lowered. It doesn’t seem fair, does it? You need to borrow money, but to borrow money, a lender checks your credit—which can ding your credit score, making it harder to borrow. What’s up with that?
Many traditional lenders and financial institutions perform what’s called a “hard credit inquiry”—or hard credit check—when they review your credit. This means they’re judging your credit score, credit report and credit history to determine how risky it will be to lend you money. So why does a hard credit check hurt your credit?
A number of hard credit checks in a short amount of time is often interpreted as a sign that you’re desperate for money—it may look like you’re either mismanaging the money you have or simply trying to accrue more debt without paying off the money you currently owe. It makes you look risky—and your credit score is then lowered to reflect that risk.
If you need fast cash, then you’re likely only concerned about getting the money you need now and not letting a bunch of hard credit checks further lower your score. In these cases, a no credit check loan may seem like just what you need. But be careful! There are different types of no credit check loans, and while some are safe—many are not. It’s crucial to understand the difference between the two so that you can improve your financial situation, rather than harming it.
How do regular No Credit Check Loans work?
If a lender is offering you a loan without looking into your credit at all, they’re probably a predatory payday or title lender. Predatory lenders offer loans at astronomically high annual percentage rates (350 percent and above) and for very short terms (usually 2 to 4 weeks). This toxic combination of high rates and short terms amounts to a loan that can be impossible to repay. Why would someone loan you money that you can’t repay? Good question. Loans like these are designed to trap borrowers into a cycle of debt through an action called rollover (a persistent pattern of “extending” the loan while incurring new fees and interest charges). This means you keep paying and paying… and paying… and paying, but you’re just paying the interest on the loan—not on the principal of the loan itself.
How do OppLoans Soft Credit Check Loans work?
At OppLoans, we make our lending decisions based on a number of factors outside of your credit score. These include proof of regular employment for at least the past two months, and a traditional bank account in your name with at least 90 days of history. This—and other criteria—all adds up to a picture of your ability to repay your loan.
OppLoans safely performs what is called a “soft credit check.” A soft credit check is an inquiry that will only return a high-level description of your creditworthiness. The most important thing to know about soft credit checks is that they do not affect an individual’s credit score.
Why OppLoans is different.
If you’re worried about your credit score and you need money now, there are basic actions you can take to protect yourself and improve your financial reality.
Remember to avoid the debt trap of predatory lenders like payday and title lenders. They target the financially vulnerable and can take your situation from bad to disastrous.
Secondly, don’t go for the typical hard credit inquiries performed by many lenders. Your credit score can be negatively impacted making it more difficult to secure credit and loans in the future.
Instead, seek a personal installment loan from a lender that performs soft credit inquiries that won’t affect your score. The installment loans offered by OppLoans are cheaper, safer, and more responsible than the predatory alternatives.
OppLoans focuses on your ability to repay—instead of your credit score—which means you can get a fast and affordable financial solution to whatever life throws your way. And we also report payments to credit bureaus so that your credit score can be improved over time.
OppLoans is here for you. If you need financial assistance in the form of a safe and secure personal loan, apply today for a no-credit check loan that can solve your immediate financial problem and help improve your credit!
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The OppLoans Guide to Safe Personal Loans
Ann Logue, MBA, CFA
June 15, 2016
Borrowers Deserve Better than a Payday Loan: The Story Behind the 36% APR Benchmark
Jared Kaplan, CEO, OppLoans
May 31, 2016